ASPILI, Nery B.

Intellectual Property Law

SHANG PROPERTIES vs. ST. FRANCIS DEVELOPMENT CORPORATION

G.R. No. 190706
July 21, 2014

FACTS:

St. Francis Development Corporation, a corporation engaged in real estate business and the developer of the St.
Francis Square Commercial Center in Ortigas, filed an intellectual property violation case for unfair competition, false or
fraudulent declaration, and for damages against Shang Properties Realty Corporation before the IPO Bureau of Legal
Affairs (BLA) arising from the latters use and filing of applications for the registration of the marks The St. Francis
Towers and The St. Francis Shangri-La Place. Respondent alleges that, it has gained substantial goodwill with the
public that consumers and traders closely identify the said mark with its property development projects, thus,
petitioners could not have the mark "THE ST. FRANCIS TOWERS" registered in their names, and that petitioners use of the
marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" in their own real estate
development projects constitutes unfair competition as well as false or fraudulent declaration.

The real estate development projects of the aforementioned companies are located along the streets bearing the name
St. Francis, particularly, St. Francis Avenue and St. Francis, both within the vicinity of the Ortigas Center.

BLA found that petitioners committed acts of unfair competition against respondent by its use of the mark "THE
ST. FRANCIS TOWERS" but not with its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It, however,
refused to award damages in the latters favor, considering that there was no evidence presented to substantiate the amount of
damages it suffered due to the formers acts. The BLA found that "ST. FRANCIS," being a name of a Catholic saint, may be
considered as an arbitrary mark capable of registration.

IPO Director General reversed the BLAs finding that petitioners committed unfair competition through their use of
the mark "THE ST. FRANCIS TOWERS," thus dismissing such charge.

CA, however, found petitioners guilty of unfair competition not only with respect to their use of the mark "THE ST.
FRANCIS TOWERS" but also of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." Accordingly, it ordered
petitioners to cease and desist from using "ST. FRANCIS" singly or as part of a composite mark, as well as to jointly and
severally pay respondent a fine in the amount of 200,000.00. The CA did not adhere to the IPO Director-Generals finding
that the mark "ST. FRANCIS" is geographically descriptive, and ruled that respondent which has exclusively and
continuously used the mark "ST. FRANCIS" for more than a decade, and, hence, gained substantial goodwill and reputation
thereby is very much entitled to be protected against the indiscriminate usage by other companies of the trademark/name it
has so painstakingly tried to establish and maintain. Further, the CA stated that even on the assumption that "ST. FRANCIS"
was indeed a geographically descriptive mark, adequate protection must still be given to respondent pursuant to the Doctrine
of Secondary Meaning

ISSUE:

Whether or not St. Francis, a geographically-descriptive term, can be registered as a mark under the Intellectual
Property (IP) Code of the Philippines.

HELD:

NO. The term is ineligible for trademark registration. In general, a geographically-descriptive mark, because of
its general public domain classification, is perceptibly disqualified from trademark registration. Section 123.1(j) of the IP
Code provides that a mark cannot be registered if it consists exclusively of signs or of indications that may serve in trade to
designate the kind, quality, quantity, intended purpose, value, geographical origin, time or production of the goods or
rendering of the services, or other characteristics of the goods or services, because these descriptive geographical terms are
in the public domain simply because every seller should have the right to inform customers of the geographical origin of his
or her goods or services.

Geographically descriptive term is defined as any noun or adjective that designates a geographical location on
earth, such as continents, nations, regions, states, cities, streets and addresses, areas of cities, rivers, or any other location

1 | Shang Properties v. St. Francis, G.R. 190706 (2014)

 ASPILI, Nery B.
Intellectual Property Law

referred to by a recognized name, that are regarded by buyers as descriptive of the geographic location of origin of the goods
or services.

Thus, if the mark sought to be registered is the name of the place or region from which the goods actually come,
then the geographic term is probably used in a descriptive sense. Hence, the term is ineligible for trademark registration.

Is there an exception to the rule? A geographically descriptive mark can still be registered if the same has acquired a
secondary meaning. This means, that a descriptive mark no longer causes the public to associate the goods with a particular
place, but to associate the goods with a particular source (seller or producer). It must be shown that the purchasers come to
immediately associate the mark with only the seller or producer of the goods. In other words, the mark itself has acquired
another meaning no longer that of a particular place, but it has come to mean that the goods or services are that of the seller
or producer.

Under Section 123.234 of the IP Code, specific requirements have to be met in order to conclude that a
geographically descriptive mark has acquired secondary meaning, to wit: (a) the secondary meaning must have arisen as a
result of substantial commercial use of a mark in the Philippines; (b) such use must result in the distinctiveness of the mark
insofar as the goods or the products are concerned; and (c) proof of substantially exclusive and continuous commercial use in
the Philippines for five (5) years before the date on which the claim of distinctiveness is made.

In the instant case, the Supreme Court held that the use of the marks The St. Francis Towers and The St. Francis
Shangri-La Place was meant only to identify, or at least associate, the real estate projects with its geographical location.
Considering that both companies are business competitors engaged in real estate or property development, providing goods
and services directly connected thereto, there can be no description of its geographical origin as precise and accurate as that
of the name of the place where they are situated.

WHEREFORE, the petition is GRANTED. The Decision dated December 18, 2009 of the Court of Appeals in CA-
G.R. SP No. 105425 is hereby REVERSED and SET ASIDE. Accordingly, the Decision dated September 3, 2008 of the
Intellectual Property Office-Director General is REINSTATED.

2 | Shang Properties v. St. Francis, G.R. 190706 (2014)